Exemption from capital gain for purchase of house on loan

As per various court rulings exemption can be claimed by assessee because Sec 54 not require that the new house to be purchased in the name of assessee,it only require that only the proceeds of capital gain to be used for investment u/s 54.

Thus,you can invest upto maximum of Rs 3.70 lacs(capital gain).

Dear Radhika,

Section 54 clearly says that if the assessee is owner of the property, he is entitled to exemption even if the new property purchased is in the name of his wife but the same is assessed in the hands of the assessee.  The same was held in the case of CIT v. V. Natarajan 154 Taxman 399 (Mad.) [2006].

But What if House Purchased from money borrowed through home loan (in Joint Name as co-borrower)????

 

Also eligibility of Assessee (Husband) to claim Interest paid on Home Loan u/s 24 AND deduction in respect to Principal Repayment u/s 80C???

Originally posted by : HAYEDAR SALEEM SHAIKH
	Dear Radhika, Section 54 clearly says that if the assessee is owner of the property, he is entitled to exemption even if the new property purchased is in the name of his wife but the same is assessed in the hands of the assessee.  The same was held in the case of CIT v. V. Natarajan 154 Taxman 399 (Mad.) [2006].

 

But What if House Purchased from money borrowed through home loan (in Joint Name as co-borrower)???? Not from receipt from sale of old house.   

Also eligibility of Assessee (Husband) to claim Interest paid on Home Loan u/s 24 AND deduction in respect to Principal Repayment u/s 80C???

As a co-owner, he is eligible u/s. 24 and u/s. 80c.

For your information -

Section 54 states that same amount of sale consideration should be utilized for acquisition of property, even borrowed funds can be utilized for that purpose.

 

Originally posted by : HAYEDAR SALEEM SHAIKH
	As a co-owner, he is eligible u/s. 24 and u/s. 80c. For your information - Section 54 states that same amount of sale consideration should be utilized for acquisition of property, even borrowed funds can be utilized for that purpose.

As per Radhika's Case,

He is not co-owner. He has purchased Flat in name of his wife alone. But in Home Loan, he is co-borrower.

Can We claim Exemption u/s 54 for house purchased through home loan.?? ANY CASE LAW??

Originally posted by : Saurabh Maheshwari
	As per various court rulings exemption can be claimed by assessee because Sec 54 not require that the new house to be purchased in the name of assessee,it only require that only the proceeds of capital gain to be used for investment u/s 54. Thus,you can invest upto maximum of Rs 3.70 lacs(capital gain).

Yes, Ravi is right understood my question. He is not Co-Owner. He is Only Co-borrower for home loan.

What is your Oppinion on this matter???

Sorry for the same.

 

See the case laws of Ishar Singh Chawla v. Dy. CIT [2010] 130 TTJ (Mum.)(UO) 108.

It has been mentioned in section 54 that same funds must be utilized for purchase of another residential house, requirement of law is that, assessee should purchase residential house within specified period and source of funds is quite irrelevant.

As per section 54 even an amount spent in house building within 1 year immediately proceeding the year of sale, the assessee becomes eligible.

Originally posted by : Rajesh Kumar Gupta
	As per section 54 even an amount spent in house building within 1 year immediately proceeding the year of sale, the assessee becomes eligible.

Hello Sir,

The Question is whether Exemption can be availed for House (Flat) Purchased on HOME LOAN. And not from receipt from sale of old house.

If Yes, Can we simulteneously claim Interest on Home Loan u/s 24 and Principal Payment Deduction u/s 80C??? (is it not double Deduction???)

Yeah u can claim exemption even if new property is purchased out of borrowed funds provided it is purchased within the time limit specified.

You can claim deduction of interest u/s 24b and principal payment u/s 80C. There is no double deduction bcoz principal does not include interest component.

Hello its avinash bhagat n i am the student of cpt.... I want to ask u that .. Why closing stock is coming in trading account as it is real account n trading account contains only nominal nature only .?????

Hello Radhika , Answer to your 1) Yes , he can claim exemption u/s 54 as in sec54 it is said the proceeds of old house should be utilized for purchase of a new residential house property. 370000 in this case, should be utilized for the purchase of new rhp ,then borrowed fund can also be utilized as much. 2)as a co owner he is eligible for deduction u/s 80C for principal payment to the extent it has been paid from his bank account. 3) The interest limit of rs200000 u/s 24b can be enjoyed by both husband and wife each. 4) Tax planning: if the income of husband is more , then show a loan given by wife to husband of the joint holding of the principal amount as per joint holding agreement. And then pay it from husband account and claim full 1200000 principal amt by assessee.

Hello Radhika , Answer to your 1) Yes , he can claim exemption u/s 54 as in sec54 it is said the proceeds of old house should be utilized for purchase of a new residential house property. 370000 in this case, should be utilized for the purchase of new rhp ,then borrowed fund can also be utilized as much. 2)as a co owner he is eligible for deduction u/s 80C for principal payment to the extent it has been paid from his bank account. 3) The interest limit of rs200000 u/s 24b can be enjoyed by both husband and wife each. 4) Tax planning: if the income of husband is more , then show a loan given by wife to husband of the joint holding of the principal amount as per joint holding agreement. And then pay it from husband account and claim full 1200000 principal amt by assessee.